TIDMSIHL
RNS Number : 5796N
Symphony International Holdings Ltd
26 September 2023
Symphony International Holdings Limited ("Symphony or the
"Company")
26 September 2023
Dear Shareholders,
-- Symphony International Holdings Limited's ("Symphony" or the
"Company") unaudited Net Asset Value ("NAV") at 30 June 2023 was
US$403,587,911 and NAV per share was US$0.7862. This compares to
NAV and NAV per share at 31 March 2023 of US$457,196,831 and
US$0.8906, respectively. The decrease in NAV by 11.7% quarter over
quarter is due to a decline in value of unlisted investment,
particularly in the logistics sector, and the accrual of dividends
payable following a dividend announcement on 29 June 2023.
-- Symphony's share price continued to trade at a discount to
NAV. At 30 June 2023, Symphony's share price was US$0.41,
representing a discount to NAV per share of 47.3%. This compares to
a share price discount to NAV of 49.5% at 31 March 2023.
We would like to highlight some of the key developments in our
portfolio companies during the quarter:
-- Minor International Public Company Limited ("MINT"): In Q2
2023, MINT recorded record core profit growth of THB 3.0 billion,
which represented a 148% y-o-y increase from 2Q 2022 and was 52%
above pre-Covid 2Q19. On the back of these results the company
announced an interim cash dividend payment of THB 0.25 per share
which underscores the company's robust cash flows from operations,
improved balance sheet strength, and confidence in its positive
outlook for sustained growth.
-- Indo Trans Logistics Corporation ("ITL"): ITL faced
significant headwinds during the second quarter, which is
reflective of the overall logistics sector. The weakness is the
result of slowing economic growth and other factors. The
challenging environment is expected to continue for the remainder
of 2023.
-- WCIB International Co. Ltd. ("WCIB"): The school generated
its first operating profit for the year ended 31 July 2023 with
enrolments running ahead of budget. The management team plan to
further expand the facilities and student capacity beyond 1,500
students.
-- Creative Technology Solutions DMCC ("CTS"): Symphony entered
into binding agreements and completed the sale of its interest in
this business in Q3 2023. Excluding contingent deferred proceeds,
the sale generated a net return per annum and times the original
cost of investment (taking into account dividend distributions) of
approximately 23.1% and 2.4 times, respectively
-- Meesho, Inc ("Meesho"): In the month of August 2023, Meesho
announced it turned profitable at a consolidated PAT level,
encompassing all costs (including ESOP), across all its divisions
and categories. Also during the same month, Meesho achieved the
milestones of registering 500 million downloads, crossing a one
million seller base and was included in TIME Magazine 's TIME 100
most influential companies list for 2023.
-- House of Kieraya Private Limited ("Furlenco"): In Q2 2023
Furlenco raised new capital by issuing securities to Sheela Foam
Limited ("SFL") for INR3 billion (US$36.6 million). The transaction
increased SFL's interest in Furlenco by 35%. SFL is an Indian
publicly listed company that provides foam products for furniture
and other related fixtures and fittings. The investment into
Furlenco will help SFL enter the fast-growing branded furniture
market. Furlenco now is well capitalized to grow the business and
increased its marketing efforts to add customers.
MARKET OVERVIEW AND OUTLOOK
The first half of 2023 was positive for risk assets across the
world. In the US the NASDAQ was up 31.7%, its best start to the
year since 1983 while the S&P500 was up 15.9%. However,
inflation continues to remain a key concern as we enter the second
half of 2023. In July, the US Federal Reserve raised its benchmark
interest rate by a quarter of a percentage point to the highest
level in 22 years as it left the door open to further increases
during the year. Having raised its benchmark rate from near zero in
March 2022 to more than 5%, the Fed is now closer to a level of
borrowing costs it deems "sufficiently restrictive" to bring
inflation down to its longstanding 2% target in a timely
manner.
As per a recent International Monetary Fund ("IMF") report,
following a reopening boost, China's recovery is losing steam.
Manufacturing activity and consumption of services in China
rebounded at the beginning of the year when Chinese authorities
abandoned their strict Covid-19 lockdown policies; net exports
contributed strongly to sequential growth in February and March as
supply chains normalized and firms swiftly put backlogs of orders
into production. Nonetheless, momentum has slowed as a result of
continued weakness in the real estate sector that has weighed on
investment, and slowing foreign demand that is affecting exports.
In addition, rising youth unemployment (at 20.8% in May 2023)
indicates structural and cyclical issues in the labour market. As a
result, the expectation that China will drive global growth in 2023
has declined.
Expressing confidence in the growth potential of the Indian
economy, Morgan Stanley published an optimistic report on the back
of positive foreign direct investment ("FDI") and the country's
"reform and macro-stability agenda" that supports a positive
outlook for capital expenditure and profits. S&P Global has
projected that India's gross domestic product ("GDP") will nearly
double from US$3.4 trillion in FY2023 to US$6.7 trillion in FY2031.
This increase would correspond to a per capita GDP of approximately
US$4,500 from US$2,500 currently. Despite the possibility of a
slowdown in GDP to 6% in FY2024 due to a global slowdown and the
delayed effects of policy rate increases by the Reserve Bank of
India ("RBI"), S&P Global maintained that India will remain the
fastest growing economy among the G20 countries.
Thailand's economy grew 2.5% year-on-year in the second quarter,
as indicated from the data from the National Economic and Social
Development Council ("NESDC"). Economic growth during the three
months to June was largely due to strong exports, which account for
more than 60% of the country's GDP, and the recovering tourism
industry, which has more than a 15% share of GDP. The World Bank in
its semi-annual Thailand Economic Monitor, said that the economy is
projected to grow at 3.9% in 2023 up from 2.6% the year earlier due
to stronger-than-expected demand from China, Europe and the United
States, private consumption growth and a recovery in tourism. The
return of tourists, particularly from China, has strengthened the
tourism outlook. Arrivals are projected to reach more than 28.5
million by the second half of 2024 or 84% of the 2019 pre-pandemic
levels. The increase in tourist arrivals is expected to benefit our
portfolio, particularly our holding in Minor International Pcl
("MINT").
Vietnam's GDP in the second quarter of 2023 grew by 4.1%
compared to the same period the previous year. The figure is
greater than the first quarter's 3.3% growth. This increase marks
the seventh consecutive quarter recording GDP growth. Nevertheless,
Vietnam is still coping with challenges from weakening trade. The
total turnover of imports and exports reached US$316.7 billion in
the first half of 2023, down 15.2% over the same period the year
before. The decrease in trade is due to weakening global demand and
high logistics costs making some Vietnamese export goods less
competitive than those of other countries. However, we continue to
expect the growing domestic economy and restructuring of supply
chains away from China to continue to benefit trade in the
long-term. Symphony's investment in Indo Trans Logistics
Corporation ("ITL Logistics") will be impacted by these trends in
the short-run, but we remain positive on the long-term outlook for
this business.
While we see our investee companies benefiting from improving
economic conditions, there are heightened risks on the horizon,
including inflation and geopolitical tensions that may again upend
economies. Aside from the potential impact from these risks, we
believe our investee companies are well positioned for future
long-term growth.
COMPANY UPDATE
Symphony's listed investments accounted for 14.7% of NAV at 30
June 2023 (or US$0.1158 per share), which compares to 13.0% of NAV
(or US$0.1154 per share) at 31 March 2023. The change is due to an
increase in share price of MINT, which was partially offset by a
depreciation of onshore Thai baht rate by 3.7%, and a decline in
value of unlisted investments.
The value of Symphony's unlisted investments (including
property) comprised 88.8% of Symphony's NAV (or US$0.6980 per
share), which compares to 88.6% (or US$0.7890 per share) at 31
March 2023.
Temporary investments accounted for (3.5%) of NAV (or
(US$0.0277) per share), which compares to (1.55%) of NAV (or (US$0.
0138) per share), per share at 31 March 2023.
Symphony's share price continued to trade at a significant
discount to NAV. At 30 June 2023, Symphony's share price was
US$0.41, representing a discount to NAV per share of 47.3%. This
compares to a share price discount to NAV of 49.5% at 31 March
2023.
PORTFOLIO DEVELOPMENTS
HOSPITALITY
Minor International Public Company Limited ("MINT"): is a global
company focused on three core businesses: hospitality, restaurants
and lifestyle brands distribution. MINT is a hotel owner, operator
and investor with a portfolio of over 530 hotels under the
Anantara, Avani, Oaks, Tivoli, NH Collection, NH, nhow, Elewana,
Marriott, Four Seasons, St. Regis and Radisson Blu brands in 55
countries across Asia Pacific, the Middle East, Africa, the Indian
Ocean, Europe, South and North America. MINT is also one of Asia's
largest restaurant companies with over 2,500 outlets system-wide in
23 countries under The Pizza Company, The Coffee Club, Riverside,
Benihana, Thai Express, Bonchon, Swensen's, Sizzler, Dairy Queen,
Burger King, Coffee Journey and GAGA brands, in addition to over
1,000 outlets of MINT's strategic alliances (i.e. S&P and
BreadTalk). MINT is one of Thailand's largest distributors of
lifestyle brands and contract manufacturers. Its brands include
Anello, BergHOFF, Bossini, Charles & Keith, Joseph Joseph,
Zwilling J.A. Henckels and Minor Smart Kids.
Company Update: In Q2 2023, MINT recorded record core profit
growth of THB 3.0 billion, which represented a 148% y-o-y increase
from Q2 2022 and was 52% above pre-Covid Q2 2019. On the back of
these results the company announced an interim cash dividend
payment of THB 0.25 per share which underscores the company's
robust cash flows from operations, improved balance sheet strength,
and confidence in its positive outlook for sustained growth.
The increase in travel activities across the geographies in
which MINT operates drove a strong y-o-y core profit growth of 120%
for Minor Hotels, resulting in core profit of THB 2.6 billion for
Q2 2023. A robust start of high travel season in Europe also
contributed to the strong result and led to an average occupancy of
72% and a 18% y-o-y surge in ADR for Minor Hotel's owned hotels in
Europe and Latin America. The sustained upturn in global travel
demand, together with implementation of Minor Hotels' dynamic sales
and marketing strategy, resulted in Q2 2023 RevPar growth of 21%
y-o-y.
MINT's restaurant business also recorded strong growth in Q2
2023, with core profit of THB 427 million in Q2 2023 compared with
THB 4 million in Q2 2022. In Thailand, same-store sales recorded an
12% y-o-y increase, primarily due to Minor Food's continued
initiatives to capture returning footfall through viral marketing
campaigns and new product launches. China, in particular, saw a
significant rebound in Q2 2023 with the lifting of lockdowns and
dine-in restrictions, resulting in a 40% growth in same store sales
compared to Q2 2022.
The company's active capital structure management has resulted
in a strong financial position, with substantial THB 22 billion in
cash reserves, THB 31 billion unutilized credit facilities and net
interest bearing ratio of 1.09x, well below MINT's internal
threshold of 1.30x and debt covenant of 1.75x.
Mr. Dillip Rajakarier, Group CEO of MINT, commented on 2H23 and
2024 momentum: "The achievement of our recent record-breaking
quarterly profit of THB 3 billion, together with continued momentum
expected for the rest of the year have provided us with the
confidence to not only reward our shareholders but also provide
room for further expansion throughout this year and into 2024."
During the quarter, the value of Symphony's investment in MINT
increased from US$59.2 million at 31 March 2023 to US$ 59.5 million
at 30 June 2023. The change in value is predominantly due to an
increase in MINT's share price by 6.2%, which was partially offset
by a deprecation in the onshore Thai baht by 3.7% and the sale of
warrants that generated US$1.1 million in net proceeds.
LIFESTYLE/ REAL ESTATE
Minuet Limited ("Minuet"): is a joint venture between the
Company and a Thai partner. The Company has a direct 49% interest
in the venture and is considering several development and/or sale
options for the land owned by Minuet, which is located in close
proximity to central Bangkok, Thailand. Since the original
investment, several parcels of land have been sold to local
developers and a large piece has been used to develop the
Wellington International School in Bangkok. As at 30 June 2023
Minuet held approximately 186.75 rai (29.88 hectares) of land in
Bangkok, Thailand.
Company Update: The value of Symphony's interest 30 June 2023
was US$59.9 million based on an independent valuation. This
compares to US$61.9 million at 31 March 2023. The change in value
is predominantly due to a depreciation in the Thai baht, by 3.3%
during the same period.
Symphony's original investment in Minuet was $78.3 million.
Total distribution receipts from partial sales of land have
amounted to US$65.2 million. We believe, that barring unforeseen
developments, and given the development activity in the area, the
remaining land will enable us to realise proceeds well in excess of
the current valuation.
SG Land Co. Ltd ("SG Land") : SIHL acquired approximately 50% of
the outstanding shares of SG Land in a JV with Thai Factory
Development ("TFD"). SG Land owns the leasehold rights to SG Tower
and Millenia Tower, which are office buildings in central Bangkok,
Thailand. The leases for the two buildings expire at the end of
October 2023 and November 2025, respectively. As the end of the
lease approaches, occupancy levels are expected to decline as
tenant leases run-off.
Company Update : SG Land continues to make regular distributions
to its shareholders. During the Q2 2023, Symphony received a net
distribution payment of US$0.5 million. Based on an independent
valuation at 30 June 2023 and historical distributions, the net
return from this investment is expected to be approximately 8.5%
per annum over a period of approximately 16 years.
Niseko Property Joint Venture ("Niseko JV") : Symphony invested
in a property development venture that acquired land in Niseko,
Hokkaido, Japan. Symphony has a 37.5% interest in this venture, The
Niseko JV sold 31% of the development site to Hanwha Hotels &
Resorts with a further 39% to a new joint venture company that is
equally held and being co-developed by the Niseko JV and the Hanwha
Group. The Niseko JV continues to effectively hold approximately
50% of the total site, which includes a 100% interest in one parcel
of land which is being held for future development and/or sale.
Company Update : The property market in Niseko has been steadily
improving over the past year, which is partly reflective of the
overall growing interest around real estate in Japan. The
development pipeline in Niseko remains strong with a number of new
projects expected to be launched in the coming years however, there
remains a chronic shortage labour resources affecting operations of
existing businesses and developments. Record prices for
condominiums were achieved during the 2022/2023 ski season and
there is a strong expectation that stronger sales will be achieved
during the upcoming season.
The part of the site to be co-developed by the Niseko JV and the
Hanwha Group remains in the planning phase. We expect to accelerate
design and marketing work streams following the 2023/2024 ski
season.
Desaru Property Joint Venture in Malaysia : The Company has a
49% interest in a property joint venture in Malaysia with an
affiliate of Destination Resorts and Hotels Sdn Bhd, a hotel and
destination resort investment subsidiary of Khazanah Nasional
Berhad, the investment arm of the Government of Malaysia. The joint
venture has developed a beachfront resort with private villas for
sale on the south-eastern coast of Malaysia and that are branded
and managed by One&Only Resorts ("O&O"). The hotel
operations were officially launched in September 2020.
Company Update: The hotel continues to focus on activating more
weekday visitors from Singapore and Malaysia with various F&B,
Spa and Beach Club-related promotions. Symphony and Destination
Resorts are in discussions with various parties related to planning
for the sales launch of the private residences globally.
Symphony has invested an aggregate of US$58.8 million in the
joint venture as of 30 June 2023. The fair value on the same date
was US$27.5 million. This compares to a fair value of US$27.9
million at 31 March 2023. The change in value is due to different
assumptions used in the valuation for this investment.
Isprava Vesta Private Limited. ("Isprava") : In January 2023
Symphony invested in Isprava, a company in the business of
construction, designing and sale of branded villas in non-urban
markets in India such as Alibagh, Goa and Kasauli. The company is
also in the in the business of renting luxury holiday homes under
the brand name of "Lohono Stays" and includes both homes
constructed and sold by Isprava and third-party homes in India and
overseas.
Company Update: Isprava closed the quarter with a strong order
book, however revenues were impacted primarily due to delays in
registrations, payments by clients, permissions and delays relating
to vendors raising invoices against fulfilled orders. The lower
than budgeted revenues will catch-up over the next two months with
critical process enhancements being implemented to prevent delays
in the future. In parallel, Isprava is undertaking several
technology implementation initiatives from introducing a project
management software and a firm-wide ERP system to developing
generative AI products to augment their design capabilities. The
gross profit margin continues to remain robust; the company has 170
homes under development at the close of the quarter, all of which
are projected to be delivered on time to clients.
Lohono has over 120 homes operational on its platform as of Q1
FY23-24, aligned with the target. GMV collection in this quarter
has been the highest ever since the company's inception.
HEALTHCARE
ASG Hospital Private Limited ("ASG"): is a full-service eye-
healthcare provider with operations in India, Africa, and Nepal.
ASG was founded in Rajasthan, India in 2005. ASG's operations have
since grown to 145 clinics, which offer a full range of
eye-healthcare services, including outpatient consultation and a
full suite of inpatient procedures. ASG also operates an optical
and pharmacy business, which is located within clinics. Symphony
invested in ASG in tranches from October 2019 through to July 2020
and subsequently acquired secondary shares in October 2021. In
2022, Symphony sold approximately a third of its shares at 2.4
times its cost of shares sold.
Company Update: Following the consolidation of Vasan Health Care
Pvt Ltd in March 2023 that added approximately 90 clinics to ASG's
network, the group continues to grow its pipeline of greenfield and
brownfield opportunities. Management is also focused on improving
and integrating operations of recent acquisitions with success.
Symphony's gross and net investment cost in ASG was US$20.7
million and US$3.7 million at 30 June 2023, respectively. The lower
net cost is the result of proceeds received from the partial sale
of shares in 2022 for US$17.0 million. The fair value of Symphony's
remaining investment at 30 June 2023 was US$31.0 million, which
compares to US$25.8 million at 31 March 2023. The difference in
value is due to changes in certain assumptions used in the
valuation for this investment.
Soothe Healthcare Pvt. Ltd. ("Soothe"): was founded in 2012 and
operates within the fast-growing consumer healthcare products
market segment in India. Soothe's core product portfolio includes
feminine hygiene and diaper products. Symphony completed an initial
investment in Soothe in August 2019 and subsequently made
investments through convertible notes and securities from 2020 to
2023.
Company Update: Soothe continues to focus on improving margins
and expects to be monthly EBITDA positive before year end. As
mentioned in a previous update, management revamped its sales teams
to grow in key distribution channels. The changes are beginning to
bear fruit with positive momentum associated with key product
lines.
Symphony's gross and net investment cost in Soothe was US$13.4
million at 30 June 2023 following participation in a new funding
around in Q2 2023. The fair value of Symphony's investment on the
same date was US$19.5 million, which compares to US$21.4 million at
31 March 2023. The difference in value is due to changes in certain
assumptions used in the valuation for this investment.
LIFESTYLE
Liaigre Group ("Liaigre"): was founded in 1985 in Paris and is a
brand synonymous with discreet luxury, and has become one of the
most sought-after luxury furniture brands, renowned for its
minimalistic design style. Liaigre has a strong intellectual
property portfolio and provides a range of bespoke furniture,
lighting, fabric & leather, and accessories. In addition to
operating a network of 24 showrooms in 11 countries across Europe,
the US and Asia, Liaigre has a Design Studio which undertakes
exclusive architecture and interior design projects for select
yachts, hotels, restaurants and private residences.
Company Update: New orders year to June 2023 were behind
expectations in Europe and the US while in line in Asia. The
interior design business continues to perform ahead of budget and
grow its pipeline of selected projects. The management team are
undertaking several initiatives to further improve Liaigre's supply
chain and deliver on a large order book.
Symphony's gross investment cost in Liaigre was US$79.7 million
at 30 June 2023. The net cost on the same date, after deducting
partial realisations, was US$67.6 million. The fair value of
Symphony's investment was US$43.5 million at 30 June 2023. This
compares to US$49.0 million at 31 March 2023. The difference in
value is predominantly due to a decrease in comparable company
market multiples used to value this investment and trailing
12-month EBITDA for the company.
CHANINTR ("Chanintr") : Chanintr is a luxury lifestyle company,
based in Thailand, which primarily distributes high- end U.S. and
European furniture and household accessory brands, including
Liaigre, Barbara Barry, Baker, Herman Miller, Marquee, Minotti,
Bulthaup kitchens amongst others. Chanintr also provides FF&E
solutions for real estate and hotel projects. In 2019, Chanintr
launched a new program called Chanintr Residences which will
showcase custom-designed luxury residences as turnkey projects.
Company Update: Chanintr saw the sales in the furniture business
increase by 54% from the last quarter mainly driven by both
developer and residential projects. Chanintr's sales for H1 2023
was 42% higher y-o-y. The sales closed (orders confirmed) on the
other hand were 26% lower during the same period y-o-y and
reflective of the slowing economic growth in Thailand. The company
expects a recovery in the second half of the year driven by the
buoyant luxury to ultra-luxury property markets in Bangkok, Phuket
and Pattaya. The Gross Profit margin dropped slightly by 80 basis
points due to more revenue and margin contribution from
residential-design services projects which have lower margins.
Wine Connection Group ("WCG") : At the end of April 2014,
Symphony invested WCG, one of Southeast Asia's leading wine themed
Food and Beverage chains with approximately 86 outlets in Singapore
and Thailand.
Company Update: The sale of this business has been completed and
work is ongoing to determine whether conditions for incremental
contingent sale proceeds have been met.
EDUCATION
WCIB International Co. Ltd. ("WCIB") : Symphony entered into a
joint venture with WCIB International Co. Ltd. ("WCIB"), that
developed and operates Wellington College International Bangkok,
the fifth international addition to the Wellington College family
of schools from the UK. WCIB operates a co- educational school that
began operations in August 2018 and will ultimately cater to over
1,500 students aged 2-18 years of age when all phases are fully
complete.
Company Update: The school generated its first operating profit
for the year ended 31 July 2023 and enrolments have been ahead of
budget. The management team plan to further expand the facilities
and student capacity beyond 1,500 students.
Creative Technology Solutions DMCC ("CTS") : is a UAE-based
company that provides technology solutions to K12 schools in the
UAE and the Kingdom of Saudi Arabia ("KSA"). The company was
founded in 2013 to provide customized IT solutions to the education
sector, including hardware, software and training. Symphony made
its investment in CTS in June 2019.
Company Updat e: Symphony entered into binding agreements and
completed the sale of its interest in this business in Q3 2023.
Excluding contingent deferred proceeds, the sale generated a net
return per annum and times the original cost of investment (taking
into account dividend distributions) of approximately 23.1% and 2.4
times, respectively.
LOGISTICS
Indo Trans Logistics Corporation ("ITL ") : was founded in 2000
as a freight-forwarding company and has since grown to become
Vietnam's largest independent integrated logistics company with a
network that is spread across Vietnam, Cambodia, Laos, Myanmar, and
Thailand. ITL has grown to national champion status in Vietnam with
over 2,000 employees across its business units and joint ventures.
ITL's strategic plans include supporting small and medium
enterprises in Vietnam and across the Indochina region. Symphony
bought the shares that had originally been held by Singpost, the
Singapore Post office, at a cost of $42.6 million for a roughly
28.6% interest. Following a subsequent issue of shares and share
buybacks by ITL, Symphony's interest was 27.4% at 30 June 2023.
Company Update: ITL faced ongoing headwinds during the second
quarter, which is reflective of the overall logistics sector. The
weakness is the result of slowing economic growth and other factors
that have affected trade. ITL reported that air and sea freight
have been materially impacted in terms of volume and yield however,
some parts of ITL's business continue to perform well, such as the
port business. Management have indicated that the outlook for the
remainder of 2023 continues to look challenging. Nevertheless, the
fundamental long-term drivers for the logistics sector in Vietnam
remain positive.
In Q2 2023, Symphony completed the sale of a small number of
shares to a strategic Asian logistics company as part of a larger
secondary offering mentioned in earlier updates. The gross and net
sale consideration received was 5.5 times and 4.6 times Symphony's
cost of shares sold, respectively.
Symphony's gross and net investment cost related to ITL at 30
June 2023 was US$42.6 million and US$35.3 million, respectively.
The fair value for Symphony's interest in ITL on the same date was
US$63.6 million, which compares to US$106.2 million at 31 March
2023. The change in value is predominantly due to a decline in
trailing EBITDA used to value this business.
NEW ECONOMY
Smarten Spaces Pte. Ltd. ("Smarten") : In November 2019,
Symphony invested in Smarten, a Singapore based SaaS
(Software-as-a-Service) company that provides software solutions
for space management in commercial and industrial properties.
Smarten was founded in 2017 by Dinesh Malkani and offers an
end-to-end solution for workplace flexibility on a single
technology platform, to help businesses navigate the new hybrid
workplace. The SaaS technology includes four key aspects - Desk
Management, Workforce Rostering, Demand & Supply, Expenses
& Chargeback, and Asset Management; bringing together key
workforce and workplace considerations for a future-ready
solution.
Company Update: The adoption of the hybrid workplace model has
led to growth in user activity with clients including a number of
Fortune 500 companies. Smarten Spaces currently operates in over 30
countries, with significant traction in North America. In Q1
Smarten Spaces launched the full Microsoft Teams integration with
Microsoft as a sales partner for the product. On the back of this
the company is seeing increasing deal closures with enterprise
customers that has led to a steady growth of the business in Q2
2023.
August Jewellery Pvt. Ltd. ("Melorra") : Founded in January
2015, Melorra is an omni-channel fast fashion Indian jewellery
company that introduces a fresh collection of 75 new designs every
Friday, resulting in over 300 new designs per month. Melorra adopts
a minimal inventory model that uses 3-D printing technology to
achieve just-in-time manufacturing to bring products to market
efficiently. The company currently has 24 operational experience
centres across India.
Company Update: Melorra continues to focus on reducing EBITDA
burn by reducing marketing spend that has impacted sales. This
underscores the company's efforts towards reaching breakeven in six
months at the expense of growth. Gross margins for the business are
also lower as the company has grown lower margin
Marketplace-related revenue, which has become the largest
distribution channel. However, there has been some margin
improvement related to offline sales, which continue to grow. All
channels had positive contribution margin after marketing spends
and direct costs, but overall sales have trended lower. Work is
currently underway to open franchisee stores before the Diwali
festive season kicks-off.
Good Capital Partners and Good Capital Fund I ("Good Capital" or
"GCP") : GCP is majority owned by brothers Rohan and Arjun Malhotra
who have been investing their own capital since 2014 to create a
thriving ecosystem of technology start-ups. Symphony announced its
investment in July 2019 with a 10% stake in GCP and serving as an
anchor investor in its first fund, GCF1.
Company Update: Good Capital Fund I made one new fund investment
in the quarter. The Fund's cumulatively deployed capital is
currently US$12.1 million across 19 core fund investments and 56
Bharat Founders Fund investments ("BFF"), where the cheque size is
US$25,000. Currently, the Fund is in closing conversations for one
new core investment and three BFF investments in the pipeline. At
an aggregate level, the MOIC at the close of this quarter is
approximately 2.25x.
Catbus Infolabs Private Limited ("Blowhorn") : In August 2021,
Symphony invested in Catbus Infolabs Private Limited, the owner of
the Blowhorn platform. Blowhorn is a same-day intra-city last-mile
logistics provider headquartered in Bangalore, India. The company
provides seamless transportation, warehousing, and a fully
technologically integrated system to manage the end-to-end supply
chain process through an asset-light transportation and distributed
micro-warehousing network.
Company Update: The adoption of e-commerce and
direct-to-consumer business models in India is continuing to grow,
creating tailwinds for the logistics industry. However, due to the
challenging fund raising environment, the company has reduced
expenditures in order to extend its runway which has led to LTM
revenues decreasing . The company is currently working on securing
funding and working towards profitability.
House of Kieraya Private Limited ("Furlenco"): Founded in
October 2012 in Bangalore, India, Furlenco is a residential
furniture rental services business. The business has since expanded
to include selling refurbished & recycled furniture; UNLMTD, an
annual furniture and appliance subscription service and KreateOne,
an in-house furniture manufacturing facility.
Company Update: In July 2023, Furlenco raised new capital by
issuing securities to Sheela Foam Limited ("SFL") for INR3 billion
(US$36.6 million). The transaction increased SFL's interest in
Furlenco by 35%. SFL is an Indian publicly listed company that
manufactures polyurethane and polyester foam products for furniture
and other related fixtures and fittings, and for industrial and
technical sectors worldwide. . The new investment in Furlenco will
help SFL enter the fast-growing branded furniture market. Furlenco
now is well capitalized to grow the business and has re-started its
marketing efforts to add customers.
On the business front, Furlenco's customer acquisitions
increased at a significant pace in the most recent quarter. The
equity funding will enable the company to scale as well as bring
down finance costs. The company is targeting to be profitable in
the next six months.
Meesho, Inc ("Meesho"): Founded in March 2016 in Bangalore,
India, Meesho is a social e-commerce platform to sell to the next
500 million Indians coming online. Meesho is the most downloaded
app globally and is currently the third largest e-commerce platform
in India behind Flipkart and Amazon.
Company Update: In the August 2023 Meesho announced turning
profitable at a consolidated PAT level, encompassing all costs
(including ESOP), across all its divisions and categories. In the
last 12 months Meesho has seen order volumes increase to over a
billion. Vidit Aatrey, CEO and Founder at Meesho, said "As the
first horizontal e-commerce platform to achieve profitability in
India, we remain committed to driving sustainable growth,
democratizing e-commerce for everyone and unlocking the true
potential of India's heartland." In August 2023 Meesho achieved the
milestones including registering 500 million downloads, crossed a
one million seller base and lastly, earning a position on Time
Magazine's TIME's 100 most influential companies in 2023.
SolarSquare Energy Private Limited ("Solar Square") : Solar
Square was founded in 2015 and is a rooftop solar power services
company that focuses on residential homes, primarily standalone
houses, gated societies, and small commercial centres. The company
aims to make clean energy affordable and accessible and become the
trusted brand in the space.
Company Update: Solar Square had a strong quarter with May being
the highest month for residential bookings with 604 orders. The
company has onboarded 75+ housing societies in the last 2 years and
currently has the largest portfolio of housing societies in India.
During the quarter Solar Square acquired PV Diagnostics to
strengthen its R&D quality control and after sales
services.
MAVI Holding Pte. Ltd. ("Mavi") : In December 2022 Symphony
invested in Mavi, a B2B insurance and warranty programme
administration services company headquartered in Singapore with
operations in India, Thailand, and Singapore. Household wealth is
growing in South and South-East Asia with the middle class
expanding rapidly. Yet these regions are highly under-insured with
a lack of access to insurance products. Mavi is an early-stage
start-up business with a goal to develop insurance products that
are accessible, competitively priced, and tailored for the Asian
markets. The company will provide insurance and warranty programme
management services and partner with insurance and carriers in the
region to bring these products to market.
Company Update: Mavi continued to generate revenues in Q2 2023
through both the insurance business in Singapore as well as the
automotive warranty business in India. The Company is continuing to
build and secure partnerships for its insurance and warranty
services across Asia and has signed a contract with an insurance
provider to bring Mavi's insurance products to the Indian market
with an expected launch in H2 2023.
SUBSEQUENT EVENTS
Subsequent to 30 June 2023:
-- Symphony completed a follow-on investment in Mavi Holding
Pte. Ltd. The total consideration was less than 1% of NAV.
-- Symphony completed a follow-on investment in Smarten Spaces
Pte. Ltd. The total consideration was less than 1% of NAV.
-- Symphony funded capital calls related to Good Capital Fund I
and Good Capital Fund II. The total consideration was less than 1%
of NAV.
-- Symphony paid out ordinary dividends of US$ 0.025 per share
declared during the period ended 30 June 2023, resulting in a total
cash pay out of US$12,834,000 to shareholders of the Company.
-- Symphony received part of the proceeds related to the sale of
Creative Technology Solutions DMCC. The consideration was less than
1% of NAV
--
For further information:
Symphony Asia Holdings Pte. Ltd.:
Anil Thadani +65 6536 6177
Rajgopal Rajkumar
Dealing codes
The ISIN number of the Ordinary Shares is VGG548121059, the
SEDOL code is B231M63 and the TIDM is SIHL.
The LEI number of the Company is 254900MQE84GV5DS6F03.
Notes:
NAV takes into account the fair value of unrealised investments.
In accordance with the valuation policies of the Company, real
estate related investments are valued by third parties on 30 June
and 31 December each year. In addition and in accordance with the
Company's valuation policies, investments that have been held for
less than 12-months are held at cost unless there is evidence of a
diminution in the value of that investment. Although the investment
manager believes there not to be a diminution in the value of
investments held for less than 12- months, the Covid-19 pandemic
has led to a significant increase in economic uncertainty which is
evidenced by more volatile asset prices and currency exchange rates
and therefore cost may not correspond to an appropriate measure of
fair value in the current environment.
IMPORTANT INFORMATION
A more detailed Shareholder Update is available on request from
the Company and can be accessed via www.symphonyasia.com .
THIS DOCUMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION,
IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED
STATES OR ANY OTHER JURISDICTION INTO WHICH THE PUBLICATION OR
DISTRIBUTION WOULD BE UNLAWFUL. THESE MATERIALS DO NOT CONSTITUTE
AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY OR
ACQUIRE SECURITIES IN THE UNITED STATES OR ANY OTHER JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE
SECURITIES REFERRED TO IN THIS DOCUMENT HAVE NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE SECURITIES LAWS OF SUCH JURISDICTIONS AND
MAY NOT BE SOLD, RESOLD, TAKEN UP, TRANSFERRED, DELIVERED OR
DISTRIBUTED, DIRECTLY OR INDIRECTLY, WITHIN SUCH JURISDICTIONS.
NO REPRESENTATION OR WARRANTY IS MADE BY THE COMPANY OR ITS
INVESTMENT MANAGER AS TO THE ACCURACY OR COMPLETENESS OF THE
INFORMATION CONTAINED IN THIS DOCUMENT AND NO LIABILITY WILL BE
ACCEPTED FOR ANY LOSS WHATSOEVER ARISING IN CONNECTION WITH SUCH
INFORMATION.
THIS DOCUMENT CONTAINS (OR MAY CONTAIN) CERTAIN FORWARD-LOOKING
STATEMENTS WITH RESPECT TO CERTAIN OF THE COMPANY'S CURRENT
EXPECTATIONS AND PROJECTIONS ABOUT FUTURE EVENTS. THESE STATEMENTS,
WHICH SOMETIMES USE WORDS SUCH AS "ANTICIPATE", "BELIEVE", "COULD",
"ESTIMATE", "EXPECT", "INTEND", "MAY", "PLAN", "POTENTIAL",
"SHOULD", "WILL" AND "WOULD" OR THE NEGATIVE OF THOSE TERMS OR
OTHER COMPARABLE TERMINOLOGY, ARE BASED ON THE COMPANY'S BELIEFS,
ASSUMPTIONS AND EXPECTATIONS OF ITS FUTURE PERFORMANCE, TAKING INTO
ACCOUNT ALL INFORMATION CURRENTLY AVAILABLE TO IT AT THE DATE OF
THIS DOCUMENT. THESE BELIEFS, ASSUMPTIONS AND EXPECTATIONS CAN
CHANGE AS A RESULT OF MANY POSSIBLE EVENTS OR FACTORS, NOT ALL OF
WHICH ARE KNOWN TO THE COMPANY AT THE DATE OF THIS ANNOUNCEMENT OR
ARE WITHIN ITS CONTROL. IF A CHANGE OCCURS, THE COMPANY'S BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS MAY VARY MATERIALLY
FROM THOSE EXPRESSED IN ITS FORWARD-LOOKING STATEMENTS. NEITHER THE
COMPANY NOR ITS INVESTMENT MANAGER UNDERTAKE TO UPDATE ANY SUCH
FORWARD LOOKING STATEMENTS
STATEMENTS CONTAINED IN THIS DOCUMENT REGARDING PAST TRENDS OR
ACTIVITIES SHOULD NOT BE TAKEN AS A REPRESENTATION THAT SUCH TRENDS
OR ACTIVITIES WILL CONTINUE IN THE FUTURE. THE INFORMATION
CONTAINED IN THIS DOCUMENT IS SUBJECT TO CHANGE WITHOUT NOTICE AND,
EXCEPT AS REQUIRED BY APPLICABLE LAW, NEITHER THE COMPANY NOR THE
INVESTMENT MANAGER ASSUMES ANY RESPONSIBILITY OR OBLIGATION TO
UPDATE PUBLICLY OR REVIEW ANY OF THE FORWARD-LOOKING STATEMENTS
CONTAINED HEREIN. YOU SHOULD NOT PLACE UNDUE RELIANCE ON
FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE OF THIS
ANNOUNCEMENT.
THIS DOCUMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT
CONSTITUTE AN INVITATION OR OFFER TO UNDERWRITE, SUBSCRIBE FOR OR
OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF THE COMPANY IN
ANY JURISDICTION. ALL INVESTMENTS ARE SUBJECT TO RISK. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RETURNS. SHAREHOLDERS AND
PROSPECTIVE INVESTORS ARE ADVISED TO SEEK EXPERT LEGAL, FINANCIAL,
TAX AND OTHER PROFESSIONAL ADVICE BEFORE MAKING ANY INVESTMENT
DECISIONS.
THIS DOCUMENT IS NOT AN OFFER OF SECURITIES FOR SALE INTO THE
UNITED STATES. THE COMPANY'S SECURITIES HAVE NOT BEEN, AND WILL NOT
BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 AND
MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION
OR AN EXEMPTION FROM REGISTRATION. THERE WILL BE NO PUBLIC OFFER OF
SECURITIES IN THE UNITED STATES .
NEITHER THE CONTENT OF THE COMPANY'S WEBSITE (OR ANY OTHER
WEBSITE) NOR THE CONTENT OF ANY WEBSITE ACCESSIBLE FROM HYPERLINKS
ON THE COMPANY'S WEBSITE (OR ANY OTHER WEBSITE) IS INCORPORATED
INTO, OR FORMS PART OF, THIS DOCUMENT.
TO ENSURE THE COMPANY'S COMPLIANCE WITH SUB-SECTION 8(3)(A)(I)
OF THE PRIVATE INVESTMENT FUNDS REGULATIONS, 2019, THE DIRECTORS
WILL KEEP THE FINANCIAL SERVICES COMMISSION OF THE BRITISH VIRGIN
ISLANDS INFORMED OF THE NUMBER OF SHAREHOLDERS ON THE COMPANY'S
REGISTER OF SHAREHOLDERS.
THE COMPANY AND THE INVESTMENT MANAGER ARE NOT ASSOCIATED OR
AFFILIATED WITH ANY OTHER FUND MANAGERS WHOSE NAMES INCLUDE
"SYMPHONY", INCLUDING, WITHOUT LIMITATION, SYMPHONY FINANCIAL
PARTNERS CO., LTD.
End of Announcement
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